NLB welcomes probe

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The Editor
Sunday Independent

15 February 2012

NLB welcomes probe

Dianne Hawker’s article, Shake-up at lotto as protector launches inquiry, of 12 February 2012 refers.

Even though there has been no official notification of the intended probe, which the article advises is based on a complaint lodged in October, the Board welcomes the investigation by the Public Protector.

In recent years, several allegations against the NLB have been made by stakeholders and political parties but without any substantiation. The NLB believes that an independent investigation of this nature will therefore be useful.

At a joint meeting of the Board and the Distributing Agencies on 8 February 2012, a decision was taken for an independent lifestyle audit of all Board and Distributing Agency members to be carried out. The NLB Management team has also volunteered to undergo a lifestyle audit.

The Board takes allegations of irregular conduct very seriously. The Board last year received three whistleblowing cases alleging irregular conduct by some employees and members of Distributing Agencies. The matters are being investigated and have also been referred to the police for further specialised investigation.

The memorandum of 27 January to the NLB by a group of NGOs was responded to immediately and the NLB has since had no further communication from the organisers. The organisers claimed to have had ‘hard evidence’ that they would present to the NLB, which the NLB still awaits. Claims that 450 NGOs signed the memorandum have also not been substantiated.

Much of the recent outcry is as a result of the reduction in the size of grants. Larger and more urbanised NGOs have become used to receiving large grants from the National Lottery Distribution Trust Fund (NLDTF) year after year. Regulations promulgated in 2010 clearly state that 50% of the funds in the NLDTF should go to projects based in rural areas. Rural communities are often forgotten because they do not have the capacity to engage the services of professional fundraisers and therefore have difficulty complying with requirements. Lottery funds have to be spread across the country.

At the NLB national roadshow, regional workshops, provincial consultative workshops and a national indaba, stakeholders from all areas were given the opportunity to express their views on NLDTF processes. As a result, the NLB has engaged in a process of addressing those issues that do not require legislative changes as a matter of urgency. As the process unfolds, the NLB is also looking at other ways to improve communication with stakeholders.

Following the national roadshow and regional workshops, the number of applications has increased to 12 500 applications all trying to access the R1,8 billion the NLDTF has available for 2011/2012 financial year. As a result of the larger number of compliant applications and the smaller NLDTF budget, the number of grants will increase while the value of the grants will have to be reduced to meet this greater demand.
Taking this into consideration, the Board as interim Distributing Agency for Charities and Arts and Culture, decided to revoke some of the larger grants where the applicants were not yet informed in order to share the funds available to as many deserving NGOs as possible. Letters were erroneously sent out by staff informing applicants of a ‘withdrawal’, even though applicants were not informed of the allocation in the first place. The term ‘withdrawal’ is a term used internally and is therefore not linked to the Minister’s power to withdraw applications within 7 days of allocation. Decisions for this revocation were also linked to the NLB’s compliance site visits that raised questions about some of the line items being funded.
One of the organisations whose grant was revoked decided to challenge the revocation and recently served papers on the NLB. The Board considered the papers served on it and decided that even though the amount was substantial in these times of financial distress, the nature of the project was worthy and the grant should therefore be re-instated.

Following media reports of this case, NGOs have contacted the NLB questioning why such a large grant was made to a single organisation when many welfare organisations were getting significantly smaller grants.

Yours faithfully
Professor Alfred Nevhutanda
Chairperson: National Lotteries Board